| Stock (Symbol) | Stock Price | |
Alliance Data Systems (ADS) |
$271 |
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| Data is as of | Expected to Report | Sector |
July 29, 2015 |
Oct 14 – Oct 19 |
Financial |
| Sharek’s Take | ||
 Alliance Data Systems (ADS) the largest provider air miles reward and loyalty programs and marketing for companies, especially retailers, working with 37 million households. It’s customers include Walgreens, Bank of America, General Motors, FedEx, Victoria’s Secret, Pottery Barn, J Crew, Ann Taylor, more recently Overstock.com and Gamestop. It provides private label credit card services from account origination to transaction processing, marketing, customer care and collections for more than 135 retailers then targets their customers using data like what size clothes they wear, or what they searched for online. ADS is implementing technology into its programs, like having a customer scan a bar code from an email or ap on their cell phone to get a discount, and these technological innovations are helping boost profits. This stock is on a rare pullback and I will add it to the Growth Portfolio today. ADS could have 20% profit growth during the next 4 qtrs, and I’m picking it up for 18x earnings. I consider this to be a solid buy-and-hold investment with the ability to grow in the high-teens for years to come. |
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| One-Year Chart | ||
 Profit growth was stronger earlier this year, but in reality ADS is more of a mid to high-teens grower. The P/E of 18 is reasonable, and you can see here this stock was just $300 and is now $275 today. |
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| Earnings Table | ||
 Profit growth was 14% last qtr, but sales growth was a more robust 19%.ADS beat by 7 cents, which is down from the 22 cents it beat by 2QtrsAgo and might have caused the selloff. Annual Profit Estimates ticked up slightly. Quarterly profit growth looks to be in the high-teens for much of the next 4 qtrs, and could average 20% if ADS beats. |
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| Fair Value | ||
 Profits have grown each year — bar none — every year during the last decade. The stock is currently has 17% upside to my 2015 Fair Value and 34% upside to 2016’s. I just wish I bought the stock when the P/E was in the single digits. |
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| Ten-Year Chart | ||
 Nice ten-year chart, with profits now stronger than they were ten years ago. Yearly stock growth of 20% per year during the decade on 22% annual profit growth, |
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| Power Ranking | Bottom Line | |
Growth Portfolio
13 of 24 |
Alliance Data Systems has the reward programs retailers want and customers use. I’ve been watching this stock for a while and will finally buy it today as it is on a rare pullback. ADS is undervalued and also a great buy-and-hold stock. |
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Aggressive Growth Portfolio
N/A |
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